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Massachusetts Real Estate Q&A Discussion Forum

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Nadav Swarttz
  • Cambridge, MA
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Getting Around the Due on Sales Clause when Moving to an LLC

Nadav Swarttz
  • Cambridge, MA
Posted Oct 24 2016, 18:27

Hi all, 

I'm looking to begin investing in the Boston area (Medford, Malden, East Boston, Dorchester, Quincy) and have a partner lined up. We're currently working on the partnership structure and trying to iron that out to best meet our needs. 

We would like to buy in one of our names (reasons being better rates and more willingness to lend from banks, more overall flexibility for future buying) and eventually move the property into an LLC for protection. I was specifically wondering if there is anyway to add a clause in the original mortgage agreement that would void the due on sales clause if ownership is transferred to a named entity (the LLC we would establish) or if this is not at all possible. I haven't heard of it being done but given a flexible lender, I figure it was worth exploring.

If that is not possible, we will most likely form an LLC initially and buy under the LLC to avoid the risk exposure, no matter how small, of a due on sales clause being called.

Would love to hear from you on this!

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